Did I get suckered?

byronio said: "I have been tracking the results from an ADX Uptrend list, and thought I had gotten the hang of a few key indicators....... I got in on HLTH (formerly WebMd) based on what I thought was decent ADX signals, volume, RSI, the fact that it outperformed it's sector, and the fact that it's sector was trending up as well. I bought Wednesday morning. Then this happened: [B]SAN FRANCISCO (MarketWatch) -- Emdeon Corp , formerly known as WedMD Corp., said after Wednesday's closing bell it has priced its private placement of $300 million of 3.125% convertible senior notes due 2025. Interest on the notes is payable semi-annually on March 1 and Sept. 1 of each year, beginning March 1, 2006.[/B] I don't even know what that means, but it started after hour stuff that resulted in a crazy gap down on Thursday. It has generally putzed around since then. Was that bad news? Should it have resulted in such a crazy gap down? Should I get out or does a gap caused by this news have a chance of filling soon? Does this fit the profile of a pump and dump? Any TA opinions would be appreciated."

LanceJ said: "[QUOTE=byronio]Was that bad news? Should it have resulted in such a crazy gap down? Should I get out or does a gap caused by this news have a chance of filling soon? Does this fit the profile of a pump and dump?[/QUOTE] Not really a pump and dump. Convertible Debt A term used to describe debt financing that has a feature allowing the debt to be converted to equity, often at the option of the investor, in the event of a default on repayment terms. Other times the conversion feature can be granted as a "sweetener", providing the investor with the option of converting debt to equity if results are good. Sometimes the investee company can have the option to convert the debt. There is often little distinction between certain convertible debt and certain types of preferred shares, both often referred to as "hybrid investment" vehicles. Private placement usually means with an institutional investor. Many investors, myself included, don't like private placements of convertible senior notes. Basically, HLTH did this because they needed to raise money, and they had to offer up something that was "sweeter" to raise that money now. The problem I have with HLTH doing this is that the interest of about $15 million ($3.125 million plus 22.18 million shares x $0.50 cents earnings per share projected) is going to need to be paid with something. As one investor put it: "300 million note killed shareholder value last time, this note seems less attractive than last one to facilitate shareholder growth. Anytime the company shows a sign of something good, a shoe is always getting ready to drop. Has happened for 7 plus years." Depending on the details of the private placements of convertible senior notes (and we can get that from the SEC when they file), most often these are dilutive for current share holders. For example, if one option is to purchase 20,000,000 shares of common stock at $1.50 2 years from now, and the stock is currently trading at $3, you've effectively diluted the shares by allowing an institution to purchase a large amount of shares at a price below the stocks current price. So current shareholders get 0 value if this option is exercised, plus, when the insitution then "flips" the shares at current market price, you've got massive selling going on which will push the stock down. In summary: investors want a company that is growing, that can pay for itself, that doesn't have to increase debt, that doesn't offer sweet "private placement" deals with institutions that will dilute their holdings, especially when they've already done this in the past and it hurt the growth of the stock the last time they did this."

LanceJ said: "However... keep in mind, that companies like XM Satellite Radio used precisely this tactic to raise money to fund the launching of their satellites. While small investors in XM were ticked off about it because at the time it seemed like it would be impossible for XM to make the interest payment on it, it ultimately worked out VERY well for early XM share holders. But I will say this, this was something tangible, a satellite, that they needed money to launch and put in orbit around the Earth, I understand that... but WebMD an intangible medical services over the Internet (like a weight loss interactive website or an online health database to store your private medical information like the last time you had a diabetes shot, your doctor visit history, your vaccination history..I don't want this private information anywhere near the web?!?)... Well, let's just say that WebMD ain't no XM Satellite."

byronio said: "Thanks for taking the time to break that down for me. But how much of that is more important to a fundamental-conscious long term investor as opposed to more TA swing trading type of concern? I understand that the two are related, and that a company doing sketchy stuff that may not pay off in the future might scare off short term buying, too. I guess for the future, I'm curious how much of the fundamentals I need to be concerned with (EPS, SEC filings, etc) if I'm wanting to look at ADX, SAR, PPO, RSI, etc, for entry/exit on shorter term trades. I've tried to avoid asking any beginner questions for the last few months as I continued reading and researching and Googling, but as I start to grasp a few things, if I can avoid re-inventing the wheel by learning from those of you who have done this for years, I might save myself some time and money."

HappyHarry said: "If you don't have a cohesive strategy for staying in the trade, cut your losses."

AlfredSokol said: "Personally, I'd rip and run on that one."

thezster said: "One of my favorite adages......... About the time you think you've got the market, or a system, figured out........ it'll kill you."

LanceJ said: "[QUOTE=byronio]But how much of that is more important to a fundamental-conscious long term investor as opposed to more TA swing trading type of concern? I understand that the two are related, and that a company doing sketchy stuff that may not pay off in the future might scare off short term buying, too. I guess for the future, I'm curious how much of the fundamentals I need to be concerned with (EPS, SEC filings, etc) if I'm wanting to look at ADX, SAR, PPO, RSI, etc, for entry/exit on shorter term trades.[/QUOTE] In my investing world, what works for me is short term - long term trading. I'm not above selling a stock after a couple of days because it has run up too quick. Or selling a stock in a couple of weeks after pocketing a 60% gain like I did with GDVE.PK, but then too much drama for your mama comes along. Or holding HISC 4 days and riding her up 600%. The shortest time I've held a stock is 1 hour, the longest time has been about 2 years. I try and let the market decide when I should enter or exit. To me, just using technical analysis tools like ADX, SAR, PPO, RSI, etc... while ignoring fundamental analysis is a little like calling a quarter a quarter when it only has 1 side. But I'm not a swing trader. But we could get into a never ending debate here of Day Traders versus Intermediate Traders... or Speculators versus Investors... Fundamental Analysis versus Technical Analysis...etc..I think Descartes or some other famous philosopher said it best when he basically said "When it comes to matters of taste, there is no disputing." In otherwords, when it comes to subjective preferences, there is no disputing. It's sort of like arguing which color is the most beautiful, red or blue? Which song has the best lyrics, Bob Dylan's Like a Rollingstone or Eminem's Cleanin Out My Closet? In summary, whatever is your flavor, I think you should go for it. Whatever you find yourself to be consistantly good at, and that you make the most money at, that's what you should do. If you use a little of both, and you are successful at it, then by all means that's what you should do."

thezster said: ""Quote" In otherwords, when it comes to subjective preferences, there is no disputing. It's sort of like arguing which color is the most beautiful, red or blue? Which song has the best lyrics, Bob Dylan's Like a Rollingstone or Eminem's Cleanin Out My Closet? In summary, whatever is your flavor, I think you should go for it. Whatever you find yourself to be consistantly good at, and that you make the most money at, that's what you should do. If you use a little of both, and you are successful at it, then by all means that's what you should do. "Quote" Well put! Every investor has what works for him/her (or doesn't work as the case may be).... There are few "rights and wrongs" in the investment world. Just a matter of tactics."

alhamid said: "you have to develop a trading style suited to your personality."